Desert Principles

Trading with dictators and autocratic regimes is slippery business. But in a world dependant on oil for everything from fuel for vehicles to plastic in smartphones, oil is big business. For the last eighty years, the vast majority of the world’s oil supply has come from the Kingdom of Saudi Arabia: an autocratic, aristocratic family of almost limitless wealth and power. While other ‘hotspots’ for oil exist around the world such as Venezuela, Norway and here in Canada, Saudi oil is relatively easy and cost effective to extract. Put simply, less capital spent on production means more profit at the end of the line.

Unfortunately, Saudi Arabia also has a rather questionable record for human and women’s rights. Capital punishment is routine and ranges from public stoning to beheadings and women are forbidden to drive. Nevertheless, as a wealthy country Saudi Arabia does not utilize an income tax system and education and medical care are offered to residents free of charge.

In a Western world that has been happily paying trillions of dollars to Saudi Arabia for their principal export (oil) for decades, it isn’t difficult to see how the flow of oil in exchange for capital impacts the Canadian economy. In 2014 the Canadian federal government signed an arms deal with Saudi Arabia worth an estimated $14.8 billion dollars. The deal involves the sale of Canadian made LAV-III’s (Light Armoured Vehicle) to the Saudi military and is the largest deal of its type in Canadian history. The LAV-III is built by General Dynamics Land Systems of Ontario and the deal is set to create an estimated 3,000 jobs for the local economy as well as generate considerable revenue over time.

While the Harper government were the original purveyors of the deal, the Liberal government was under considerable public pressure to put the kybosh on it due to the Saudi’s unremitting stance on public executions. However, $14 billion is $14 billion and the exchange does have the potential to have a significant impact on the Canadian economy, especially one that has suffered as of late due to the downtown of oil production in northern Alberta.

“It is legitimate for Canadians to have concerns when our government sells armed forces equipment to a country with questionable human rights”, said Wallace Chan, International Trade instructor at Ashton College. “That being said, the government should put together a policy to consistently address similar type of issues in the future rather than a case-by-case approach.” The Saudi arms deal presents enormous benefits to Canada. Not only will it open up a cottage industry for manufacturing but an influx of capital into the economy is never a bad thing. And as Liberal Foreign Minister Stephan Dion eloquently put it, if the Saudi’s don’t buy the vehicles from Canada they’ll simply buy them from somewhere else. Pragmatically speaking, there is more at stake with the deal than simply Saudi Arabia’s questionable stance on human rights. The West receives oil from the Saudi’s; the Saudi’s maintain an icy but professional relationship with Israel and supports US foreign policy in the Middle East. It’s a messy world and the deal is only one small part of it.

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